Today’s Housing Bubble Post – The House of Horrors

Merrill Lynch economist David Rosenberg calls it “the House of Horrors.”
He’s referring to his fear that a plunging housing market could turn even uglier, taking the breath out of the economy and the stock market.
… He was fretting about foreclosures nationwide surging 53 percent year-on-year in August. He was pointing out that while many adjustable-rate mortgages have yet to move upward, already the Homeownership Preservation Foundation is receiving a record number of calls from borrowers seeking help.
Whether the housing downturn will still allow a so-called soft landing for the economy or yank the shopping instinct out of the American consumer remains to be seen.

On Wednesday, the United States Federal Reserve chose to keep its target interest rate unchanged at five-point-two-five percent. The Federal Open Market Committee said a main reason for its decision was the slowing housing market.
[. . .] As fewer new homes are being built, existing homes are going unsold for longer periods of time. The government reports that the number of existing homes remaining on the market has increased by almost forty percent in the last twelve months.
… Most experts expect declining home sales to slow the economy in the near future.

And a call to lower prices: Economist says builders should take lead in housing correction,To bring the housing market into balance, Phoenix area home builders need shrink their inventory and home sellers need to realize they won’t get top dollar for their homes.
… Resales are controlling the market, he said, as many sellers continue to seek top dollar for their homes as they did during the housing boom of late 2004 and all of 2005. As a result, Brown said, fewer houses are selling.
That combined with large home builder inventories, has slowed the market. “We need to achieve a more realistic balance between supply and demand,” Brown said.